Monopolies probe could delay new train orders

Orders for new trains for the overcrowded rail networks could be put on hold for up to two years after a full Competition Commission investigation into the cost of new trains was announced today.

The Rail Regulator has called in the commission to look into whether the UK's three train leasing companies are ripping off passengers and the Government over the charges they make for new rolling stock.

"Rolling stock leasing is a significant part of train operating costs - around £1 billion a year," said rail regulator Chris Bolt.

"It appears to us however that competition is either being prevented, restricted or distorted and that train operating companies may be paying higher prices and/or receiving poorer quality of service and maintenance than if competition was effective."

However news of the inquiry, which could last two years, saw the banks that own the train leasing companies warn that they could halt investment in new trains if they are not allowed to make the profits they want.

"The current situation means that we may not be able to provide the large number of vehicles the UK rail network needs," said Haydn Abbott, chief executive of Angel Trains, owned by the Royal Bank of Scotland.

"Passenger numbers are rising and it makes sense to invest in new rolling stock. There are now question marks over that investment.

"There has been £6 billion of new trains and refurbishments and we believe we have fulfilled our remit."

The Department for Transport believes the privatised rolling stock companies - the other "roscos" are HSBC Rail and Porterbrook owned by the Abbey banking group - are making excessive profits of up to £177 million a year.